China Eastern Airlines managed to post better-than-forecast profits for 1996, providing some good news in the wake of its February listing on the Hong Kong and New York stock exchanges.
In its prospectus for the flotation (the first by a Chinese carrier), China Eastern had warned that declining yields and rising fuel prices could take net profits down to ´550 million ($66 million).
The actual profit figure came in at ´591 million, a reduction of 6.8%from 1995, while sales have risen by 10% to ´7.3 billion.
Chairman Wang Lian is reported to be "extremely satisfied" with the results and he predicts an improved performance this year as the airline's fleet and route network continue to expand.
Revenues grew by 29%on domestic services despite flat passenger figures, while international traffic grew by 35%, but experienced a 23% erosion in yields. Higher fuel costs, airport and depreciation charges also drove operating expenses up by 14%.
China Eastern now operates 42 aircraft, including three new Airbus A340-300s, and plans to take delivery of two more, along with its first three McDonnell Douglas MD-90s this year. Eight aircraft, worth $520 million, are on order for 1998 and 1999.
The fleet expansion will be funded partly through the planned sale of 500 million shares on the domestic Shanghai exchange. This follows the earlier sale of 1.4 billion shares in Hong Kong and New York, which raised $250 million.
Source: Flight International
